How Terribly Amusing: Gideon gets one right!

Which is a good thing. Yes, this is even more of a good thing the further left (or Keynesian perhaps) you go.

Rightie kitten skinners (but only if they\’re live mind!) like me argue that we need to cut the number of flatulents occupying government offices across the land. Move further left (not, to be honest, all that difficult) and you start to hear people saying that this will cut vital public services. So, what we need to get out of this mess is more growth.

With more growth she\’ll be right. Budgets will come back into balance and no diversity officer need be harmed in our economy.

So, if you do believe this version of the story what should you be arguing we do about taxes?

The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property … These findings suggest that a revenue-neutral growth-oriented tax reform would be to shift part of the revenue base towards recurrent property and consumption taxes and away from income taxes, especially corporate taxes. There is also evidence of a negative relationship between the progressivity of personal income taxes and growth.

That\’s the OECD that is and there\’s a nice little chart there as well. If growth were your aim you\’d reduce taxation upon personal incomes….NI is taxation on personal incomes….and thus Gideon is doing the right thing.

Now if I actually believed that he (or anyone else at CCHQ) had the gumption to read OECD reports then I\’d applaud his actions.

10 comments on “How Terribly Amusing: Gideon gets one right!”

LFAT, the point is that it’s blind luck that his political positioning has actually resulted in his coming up with a sensible policy (not *very* sensible – proper sensible would be abolishing NI completely and raising income tax to make up for it, therefore making completely clear how much tax everyone’s paying and also ensuring that low income taxpayers get slightly less buggered than they currently do).

You’ve still got a bit of a blind spot with ‘consumption’ taxes though. Value Added Tax is heralded as a ‘consumption tax’ but it is not – it is a tax on gross profits (the clue is in the name), i.e. a tax on jobs and a tax on profits. Think about the economic incidence of it, not what the politicians want us to think.

Mark, I’m still confused on this issue. What can’t businesses raise prices and get the consumer to pay some or indeed most of the VAT? I looked at academic studies and they all find this does happen, but you say every business with a profit margin of less than 17.5% is put out of business?

We’ve just had all the latest National Care Service discussed all day on the radio with plenty of people pointing out that they’ve already paid NI, why should they be selling houses or using savings for old age?

So a bit more luck (honesty?) from Gideon would be to end the worlds largest Ponzi scheme immediately.

The UK government pensions system is unfunded, like all future government spending. Everyone knows that; anyone who claims otherwise is either an idiot or lying to make a political point.

We know that the government will need to spend money on policemen in 10 years’ time to stop pensioners being murdered in their old age – in exactly the same sense, the government will need to spend money on pensions in 10 years’ time to stop pensioners from starving to death.

But iIf you try and amortise those likely future obligations as part of the national debt, you’re a fool. And if you pretend that the taxes you’ve already paid represent anything other than taxes that you paid when you paid them to fund government spending at that time, you’re a fool.

So the people you heard on the radio are either liars or fools; screw them.